INFO PACK

Turkey and the Energy Equation in the Eastern Mediterranean

Enes Güzel

INFO PACK

Turkey and the Energy Equation in the Eastern Mediterranean

Enes Güzel Turkey and the Energy Equation in the Eastern Mediterranean

© TRT WORLD RESEARCH CENTRE

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Enes Güzel

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TRT WORLD RESEARCH CENTRE

August 2019

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4 Turkey and the Energy Equation in the Eastern Mediterranean

Executive Summary

This info pack will focus on Turkey’s perspective re- another attempt to influence the existing positions garding developments related in energy and securi- on the offshore energy reserves in the Eastern Med- ty in the East Mediterranean and will discuss the two iterranean. In this context, the EU Foreign Relations contesting interpretations/approaches regarding Council decided to suspend negotiations on the the continental shelf in the Eastern Mediterranean, Comprehensive Air Transport Agreement (CATA) which form the core of the debate and the basis of and has agreed not to hold high-level bilateral talks, the current tensions in the region. Since the discov- including the annual Association Council meeting. ery of vast hydrocarbon resources, the right to ex- It has also endorsed the EU Commission’s proposal ploit these resources has become the subject of dis- to reduce the pre-accession assistance to Turkey for pute between Eastern Mediterranean states. Turkey, 2020. In addition, it has invited the European Invest- Greece, the Greek Cypriot Administration, the Turk- ment Bank, the EU’s not-for-profit lending institution ish Republic of Northern Cyprus, Egypt, Israel, and - to review its lending activities in Turkey, notably Lebanon have all made claims to these resources. with regard to sovereign-backed lending, which to- talled €358.8 million last year. The European Union Foreign Relations Council’s re- cent sanctions against Turkey are perceived as yet

Introduction

he discovery of large amounts of existing tensions between Turkey, Greece, and the energy resources in the Eastern Greek Cypriot Administration. Mediterranean, most notably a zone of natural gas reserves There are many issues at play. Firstly, Turkey does not dubbed ‘Leviathan’, has become recognise the Greek Cypriot administration and it’s a source of tension in the region. proclaimed EEZ. The Greek Cypriot Administration does not represent the entire island, and thus the in- TThe Greek Cypriot Administration (GCA) signed an terests of Turkish Cypriots in the Turkish Republic agreement on the delineation of the GCA Exclusive of Northern Cyprus (TRNC) have not been taken into Economic Zone (EEZ) with Lebanon, Egypt and Israel consideration. Consequently, Turkey and the TRNC without consideration of Turkish Cypriots’ rights. An- argue that the explorations authorised by the Greek kara naturally objected on the grounds that the agree- Cypriot Administration are damaging ongoing peace ment was contrary to Turkey’s and Turkish Cypriots’ talks. On the other hand, Turkey has proposed several inalienable equal rights to exploit gas resources in the solutions, including a potential joint exploration pro- Eastern Mediterranean. This situation exacerbated ject.

Hydrocarbon Discoveries

In 2009, US-based Noble Energy discovered gas in with recoverable volumes estimated at 22 trillion cu- the offshore ‘Tamar’ field, which was found to contain bic feet according to the field’s operators, Noble Ener- approximately 280 bcm (billion cubic meters) of re- gy and Delek. In December 2011, another gas reserve coverable gas. The 2010 discovery of the ‘Leviathan’ was discovered in Block 12 off the coast of Cyprus, field is one of the most significant made this century, about 34 km west of Leviathan.

5 Turkey and the Energy Equation in the Eastern Mediterranean

WHAT ARE THE ISSUES AT HAND? The issues in the Eastern Mediterranean can be evaluated The validity of the Exclusive Economic Zone Restriction on several different levels: Legal, Political, and Economic. Agreements signed by the Greek Cypriot Administration with Egypt in 2003, Lebanon in 2007, and Israel in 2011, The ongoing legal debate revolves primarily around the and the parcelled regions following these agreements issue of maritime jurisdictions. This is one of the primary form the core of the debate and the basis of the current points of tension between Turkey, the TRNC and GCA. In tensions in the Eastern Mediterranean. announcing the EEZ, the Greek Cypriot administration act- ed unilaterally, ignoring the concerns of the Turkish Com- Turkey has consistently contested the Greek Cypriot Ad- munity on the island and their representatives, the TRNC. ministration’s unilateral drilling in the Eastern Mediterra- In response, Turkey signed an agreement with the TRNC nean, arguing that Turkish Cypriots also have rights to the on September 21, 2011, known as the Agreement on the resources in the area. The unilaterally declared EEZ of the Delimitation of the Continental Shelf in the Mediterranean. Greek Cypriot Administration also violates part of Turkey’s shelf, particularly in Blocks 1, 4, 5, 6 and 7. The Greek Cypriot Administration entered into licensing agreements with international oil companies to parcel the The Greek Cypriot Administration, however, after estab- blocks of 1, 4, 5, 6, 7, which overlap with Turkey’s continen- lishing their own so-called Exclusive Economic Zone (EEZ) tal shelf. Besides, the maritime jurisdictions in blocks 1, 2, 3, in 2004 without the consent of the TRNC, started to devel- 8, 9, 12, 13 announced by Greek Cyprus coincide with the op bilateral agreements with Egypt, Lebanon and Israel. TRNC maritime border areas. They also invited international companies to make explo- rations around the island. Hence, a new dispute came into being in the Eastern Mediterranean.

Turkish and Cypriot Oil and Gas Concessions

Turkish Petroleum (TPAO) The Greek Cypriot TPAO concession blocks awarded concession blocks awarded Administration by the Turkish Republic of by the Turkish government concession blocks Northern Cyprus (TRNC)

Source: TRT World Research Centre

6 Turkey and the Energy Equation in the Eastern Mediterranean

The East-Med Pipeline Project

The EastMed pipeline project is considered another major stake-holders and Ankara to reach a compromise on the point of dispute in the region. The EastMed pipeline is one issue. However, since Turkey and the TRNC have ongoing of the most critical export projects for Eastern Mediterrane- territorial disputes with the GCA and because the project an gas. It is a US$7 billion project, spanning a distance of by-passes what Turkey and the TRNC see as their inalien- 2,200 km and connecting Israel and the Greek Cypriot Ad- able territorial rights, Ankara was expected to oppose the ministration with Greece and Italy. This project would facili- EastMed project. tate the EU objective of reducing its energy dependency on Lebanon has also objected. The Lebanese government has Russia by connecting the European market directly to gas sent warnings to its Mediterranean neighbours that it will supplies in the East Mediterranean. not allow the pipeline to violate its territorial waters. Beirut The continent’s appetite for energy is growing steadily, with will not allow Tel-Aviv to infringe on Lebanon’s sovereign demand for natural gas, in particular, expected to climb in rights and jurisdictions over its EEZ. the coming decade. The EU legislators are increasingly Moreover, in line with international law, the delineation of concerned about Russia’s large share in Europe’s gas mar- the pipelines on the continental shelf must be subject to the ket and have looked to the natural gas reserves in the East- consent of coastal states. Therefore, since Turkey’s and Leb- ern Mediterranean as a source of import diversification. The anon’s consents have not been obtained, going ahead with European Commission has labelled the EastMed pipeline this project was deemed provocative by all the concerned. a “Project of Common Interest,” and has contributed €34.5 The exclusion of Turkey has compelled Israel, the GCA and million (US$38.9 million) to complete technical studies for Greece to change the proposed route of the pipeline in or- the project. der to avoid Turkey’s maritime boundaries, making it much Furthermore, the US also supports the EastMed for geo- longer and costlier. Moreover, considering the Tamar field strategic reasons, without excluding alternative ways for – a modest, 90 km pipeline to Israel’s coastline, taking four exporting natural gas, either through Egypt’s LNG plants or years to construct - it is unrealistic to think a 2,200 km long a new LNG plant in Cyprus. From a US perspective, the pipe- pipeline would be constructed in a similar timetable. These line will give a permanent character to Israel’s connectivity factors call into question the prospect of implementing the with Europe. At the same time, it will ensure a stable supply EastMed pipeline. to the European market of “non-Russian” gas. The pipeline’s Including Turkey on the project on the other hand, would capacity, however, will only be sufficient to cover the needs enhance the feasibility of the project and its cost effective- of South and South-East Europe. Thus, it will leave ample ness. A direct connection from the natural gas fields around opportunities for American LNG exporters. Cyprus to existing pipelines and gas terminals in Turkey In the last few years, talks between the leaders of Greece, would create a far cheaper and more efficient path to Euro- Israel and the Greek Cypriot Administration to bring the pean markets. However, given the current geopolitics of the EastMed pipeline into being have continued, however the region the fact that the EastMed project has essentially been project still faces sizeable political and economic obsta- designed to exclude Turkey makes this option not viable. cles. If the EastMed takes place, it is going to pass through Turkish territorial waters, in which case one expects project

Amos Ben Gershom / GPO / Handout - Anadolu Agency

7 Turkey and the Energy Equation in the Eastern Mediterranean

THE PARTIES INVOLVED

Turkey, the TRNC, the GCA, Greece, Israel, Egypt, Lebanon dependency on Russian gas are the major concerns for the are actively involved in the eastern Mediterranean dispute. EU. From its part, Russia is concerned about losing market share in the European gas market. On the other hand, the Other entities, such as the US, the EU, Russia, England, US is more concerned about the possible security and France and Italy are closely monitoring developments in geopolitical effects on the region. the Eastern Mediterranean. Energy security and reducing

New Alliances in the Region?

The discovery of oil and gas reserves in the region On March 20, 2019, the leaders of Greece, Israel, and the engendered a new cooperative approach between Greece, GCA, as well as US Secretary of State Mike Pompeo, met the Greek Cypriot Administration and Israel. The last in Jerusalem to discuss a range of multilateral issues. decade has witnessed growing cooperation between the Among these was a formal declaration of support for the Greek Cypriot Administration, Greece and Israel as all three EastMed pipeline. Although, the pipeline proposal has countries have been supporting one another in various been discussed since 2012, the summit’s declaration of strategic areas. This includes a military aspect, which adds support appears to solidify the so-called “Energy Triangle” further layers of complexity to the conflict-prone Eastern relationship between the three nations. Mediterranean. Energy Companies Operating in the Eastern Mediterranean The discovery of oil and gas reserves in the region On March 20, 2019, the leaders of Greece, Israel, and the engendered a new cooperative approach between GCA, as well as US Secretary of State Mike Pompeo, met Greece, the GCA and Israel. The last decade has witnessed in Jerusalem to discuss a range of multilateral issues. growing cooperation between the GCA, Greece and Israel Among these was a formal declaration of support for the as all three countries have been supporting one another EastMed pipeline. Although, the pipeline proposal has in various strategic areas. This includes a military aspect, been discussed since 2012, the summit’s declaration of which adds further layers of complexity to the conflict- support appears to solidify the so-called “Energy Triangle” prone Eastern Mediterranean. relationship between the three nations.

Source: Eren Bozkurt - Anadolu Agency

8 Turkey and the Energy Equation in the Eastern Mediterranean

WHAT IS TURKEY’S EASTERN MEDITERRANEAN STRATEGY?

From the onset, Turkey has argued that both the TRNC region since April 2017. and the Greek Cypriot administration have equal rights on The Turkish-flagged drillship Fatih launched its offshore the island. Thus, the initiative taken by Cyprus regarding drilling operations on May 3, 2019, in an area located 75 oil and gas exploration should benefit all residents of the kilometres off the western coast of Cyprus. The area falls island. In response to the Greek Cypriot Administration’s entirely within the Turkish continental shelf registered declaration of the EEZ in 2004, Ankara signed an agree- with the UN and in permit licenses that the Turkish gov- ment with the TRNC in 2011 to delineate the continental ernment has granted to Turkish Petroleum, the country’s shelf. Based on this agreement, and considering their in- national oil company. The second drillship Yavuz, a twin herent and inalienable rights as the co-owners of the is- vessel of the Fatih, is located on the west of the island off land, the TRNC issued permits to Turkish Petroleum Cor- Karpas. poration (TPAO) to begin oil/gas exploration around the maritime areas of the island. Turkey, with the permission Turkey’s continental shelf rights lay in the area to the given from TRNC, has concluded its seismic exploration west of 32 degrees, 16 minutes, 18 seconds east longitude. off the coast of Northern Cyprus and Antalya and began its The outer limits of the Turkish continental shelf in the drilling operations. above-mentioned maritime areas follow the median line between the Turkish and Egyptian coastlines to a point to As the Turkish Ministry of Foreign Affairs underlined: be determined in the west of 28 degrees 00 minutes 00 “The Greek Cypriot Administration does not represent de seconds east longitude. jure nor de facto the Turkish Cypriots and Cyprus as a The Greek Cypriot officials have opposed the move, threat- whole. Hence, the Greek Cypriot administration is not enti- ening to arrest the ships’ crews and enlisting EU leaders to tled to negotiate or conclude international agreements nor their cause. The Greek Cypriot Administration reportedly to adopt laws regarding the exploitation of natural resourc- issued international arrest warrants for 25 people, includ- es on behalf of the entire island. Turkey’s official stand is ing for personnel of the Turkish drillship Fatih and officials unequivocal: the issue of natural resources should be part from companies cooperating with the state-run Turkish of a comprehensive settlement in Cyprus. ” Petroleum Corporation. Turkey denounced the arrest war- Turkey has also objected to the Greek Cypriot - Egyptian rants as unauthorized and “meaningless.” EEZ agreement since it violates Turkey’s continental shelf, In the face of Greek Cypriot actions in the Mediterranean where Turkey exercises ab initio and ipso facto legal rights Sea around Cyprus, Turkey has issued Navigational Telex as per international law. As a result, Turkey has ramped up from time to time, to carry out naval exercises or bring its its efforts in the region by expanding its fleet of drilling and naval vessels to the area with the aim of deterring the for- seismic vessels in addition to their accompanying military eign hydrocarbon firms’ operations on Turkey’s declared frigates. Turkey’s first seismic vessel, the Barbaros Hayret- EEZ and to protect its seismic ship’s exploration around tin, bought from Norway in 2013, has been exploring the Cyprus.

Source: National Defence Ministry - Anadolu Agency

9 Turkey and the Energy Equation in the Eastern Mediterranean

Maritime Disputes in the Eastern Mediterranean

Exploration site Turkish exploration site

Source: TRT World Research Centre Natural gas field

10 Turkey and the Energy Equation in the Eastern Mediterranean

WHAT DOES INTERNATIONAL LAW SAY?

According to the United Nations Convention on the Law of the Sea (UNCLOS), coastal states, such as Egypt, Turkey, Israel and the Palestinian Authority (Gaza Strip), Lebanon, Syria, TRNC and the GCA have rights to the resources in the area according to their respective Exclusive Economic Zones (EEZ) (UNCLOS, 1982). However, because of the concave shape of the Eastern Mediterranean Sea, there is an overlap in the areas each country can legally claim, creating a delicate situation that requires negotiation and compromise.

What are Maritime Boundaries and Exclusive Economic Zones (EEZ)?

Article 121, paragraph 2 of UNCLOS provides that: Coastal states have administrative and judicial powers on three main issues in the Exclusive Economic Zone. Except as provided for in paragraph 3, the territorial sea, the contiguous zone, the exclusive economic These are: zone and the continental shelf of an island are 1) To establish and use artificial islands, facilities and determined in accordance with the provisions of this structures Convention applicable to other land territory. 2) Conducting scientific research According to the Turkish Ministry of Foreign Affairs, in the case of the Eastern Mediterranean: 3) Protection and preservation of the marine environment Islands in delimitation may have been given no weight in the construction of the relevant continental According to article 476, the width of Turkish territorial shelf of EEZ delimitation line. waters is 6 miles in the Aegean Sea and 12 miles in the Mediterranean and the Black Sea and, therefore, The reason is not related to their entitlement or their Turkey can claim its own EEZ and continental shelf. potential capacity to create continental shelf or EEZs per se, but rather their distortive effect on equity.

Turkey’s position is supported by a sustained trend in international jurisprudence that has seen granting islands a reduced effect in maritime boundary delimitation. This has especially been the case where such islands are located such as there is potential overlap between EEZ claims with their mainland neighbours. According to this interpretation of international law, islands are given limited effect in maritime boundary delimitation if their location distorts equitable delimitation. Turkey argues that the island of Cyprus and the Greek Islands in the area cannot generate full EEZ/CS under international law as they distort the equitable delimitation.

11 Turkey and the Energy Equation in the Eastern Mediterranean

Turkey’s Stance in the Eastern Mediterranean

Some countries, ignoring the rights of Turkey and the Turkish Republic of Northern Cyprus (TRNC) in the Eastern Mediterranean, try to unfairly claim its natural resources. But Turkey is taking measures to protect its rights under international law.

THE GREEK CYPRIOT ADMINISTRATION’S (GCA) SO-CALLED LICENCE AREAS

TURKISH CYPRIOT’S LICENCE AREAS

OVERLAPPING AREAS

OVERLAPPING AREAS BETWEEN TURKISH CONTINENTAL SHELF AND GREEK CYPRIOT SO-CALLED LICENCE AREAS TURKISH CONTINENTAL SHELF

There are 13 so-called parcels unilaterally declared by the Greek Cypriot Administration and contracted with international oil companies.

Since the Greek Cypriot Administration does not represent the entire island, they do not have the right to continue off-shore activities unilaterally.

In the 10th Field 12 parcel, there is includes shares a partnership apportioned France’s Total In the 2nd, 3rd between US’ to US’ Noble and Italy’s Eni and 9th parcels, ExxonMobil and Energy, Britain’s have equal shares Italy’s Eni and Qatar Petroleum BG, and Israel’s of the 6th and South Korea’s Delek and Avner 11th parcels while Kogas have joint Eni alone has the licenses 8th parcel.

Greek Cypriot effort to license out further areas contiues for the TURKEY WORKING TO PROTECT ITS OWN RIGHTS AND following so-called TRNC’S RIGHTS IN THE EASTERN MEDITERRANEAN parcels: Turkey’s seismic vessel Barbaros Hayreddin Pasa, along with the Yavuz drilling vessel, started drilling and exploring 1 ST A, B, C, D, E, F and G areas under TRNC licenses.

4 ST There is no overlapping The Barbaros Hayrettin Pasa started 2D and 3D seismic in the so-called 10th and work in 2018. 11th parcels. Turkish 5 ST Cypriots claim shares in Turkey’s first drilling vessel, Fatih, began work 60 km west all so-called Greek parcels of Cyprus in May, 2019, un der Turkish government licences. 7 ST as they are the co-owners On June 20, the Yavuz drilling vessel left for the Eastern of the island. Mediterranean to operate in the TRNC licence area. 13 ST

Source: Anadolu Agency

12 Turkey and the Energy Equation in the Eastern Mediterranean

THE EU AND THE CYPRUS PROBLEM Cyprus has been divided since 1974 when Turkey used its The EU’s approach towards the Cyprus issue is an obstacle guarantor rights to intervene on the island after a far-right to finding a solution of this problem, further complicating Greek Cypriot military coup sponsored by the military jun- the problem of sharing the resources in the Eastern Medi- ta then in power in Athens sought to unite the island with terranean. Brussels’ policy to punish the Turkish side who Greece. The coup followed decade-long inter-ethnic vio- voted for a solution in the referendum on the basis of the lence targeting Turkish Cypriots, who were forced to live Annan Plan in 2004 and to reward the Greek side who vot- in enclaves when Greek Cypriots unilaterally changed the ed against the resolution is central to the problems in the constitution in 1963 and stripped the island’s Turks of their region. political rights. On the Eastern Mediterranean issue, the EU seems to have The TRNC, established in 1983 on the northern one-third of discarded its mediator role, threatening Turkey with sanc- the island, is recognized by Turkey and faces a long-stand- tions and taking a clear position in favour of the GCA’s ing embargos in a number of areas ranging from com- claims. merce and transportation, to culture. The Greek Cypriot Internal EU political dynamics may be affecting the EU’s administration meanwhile, enjoy recognition as the Re- current position as Greece and the GCA have reportedly public of Cyprus by numerous countries. threatened to veto the membership of North Macedonia The GCA was admitted to the EU in 2004, violating the EU’s and Albania unless Brussels takes a strong position against own rules of not allowing the assent of candidate countries Turkey. with ongoing border disputes. The EU also reneged on its The unresolved problem on the island of Cyprus continues assurances given to Turkey and Turkish Cypriots that the to complicate the issues in the region. The maritime bor- accession of the GCA would not take place until a perma- ders of Turkey and TRNC clash those claimed by the GCA, nent solution had been reached on the island. The mem- creating a hostile environment where the deployment of bership accession took place a week after a peace plan naval power from both sides raises concerns over regional backed by UN Secretary-General Kofi Annan was voted stability. down in the Greek south while being approved in the Turk- ish north.

Turkey and The TRNC Extended Cooperation to Cyprus

TRNC President Mustafa Akıncı presented a cooperation proposal through the United Nations on July 13, 2019, calling for the joint use of Cypriot resources and cooperation between the two sides in the search for gas off the island.

Turkey had expressed its support for the proposal, calling on the UN, the EU and the guarantor states to take this opportunity to encourage cooperation on the island’s hydrocar- bon resources.

The GCA, on the other hand, swiftly rejected the proposal by the TRNC to establish a cooperation mechanism to address the sharing of hydrocar- bon resources in the East- ern Mediterranean. Source: EU Council Pool - Anadolu Agency

13 Turkey and the Energy Equation in the Eastern Mediterranean

CONCLUSION

The discovery of large hydrocarbon reserves in the East- with UN maritime jurisdictions and international law. The ern Mediterranean has created tensions between region- EU and Greece and the GCA has called Turkey’s explora- al stakeholders over exploration and drilling rights. Al- tion activities illegal and the EU Foreign Relations Council though, the discovery was seen initially as an opportunity have sanctioned Turkey for its drilling operations in the for regional cooperation and stability, it has deepened the area. existing political disputes. It should be noted that The United Nations Convention The disagreements mainly surround the validity of mar- on the Law of the Sea (UNCLOS) recognizes all the coastal itime boundaries -- known as Exclusive Economic Zones countries’ including Turkey, Egypt, Israel and the Palestini- (EEZ) claimed by Greek Cypriots without acknowledging an Authority (Gaza Strip), Lebanon, Syria, Turkish Republic the rights of Turkish Cypriots with who they share the is- of Northern Cyprus (TRNC) and the the Greek Cypriot Ad- land. ministration’s rights over the resources in the area. There- fore the deliberate exclusion of Turkey from the explora- The GCA’s bilateral maritime deals with international oil tion/drilling activities contradicts the UNCLOS provisions. companies and countries in the region for joint exploration have created a concern for Turkey and the TRNC who ob- There is an overlap in the areas each country can legally ject on the basis that reserve exploration related activities claim, and this situation clearly requires negotiation and in the area violates their continental shelf and maritime compromise. Without reaching an agreement through borders. regional cooperation over exploration and extraction of the hydrocarbon resources will be too costly, unprofitable Despite Turkey and the TRNC’s repeated calls for coopera- and will create further instability and conflict in the region. tion and joint exploration over the hydrocarbon resources Therefore, the region’s energy security and commerce ne- in the area, the GCA and its partners have declined Tur- cessitate serious efforts to establish dialogue and cooper- key’s calls and attempted to exclude Turkey from explora- ation. tion and drilling activities.

As a result, Turkey, with the permission of the TRNC, be- gan oil/gas exploration off the coast of Northern Cyprus and Antalya and began its drilling operation in accordance

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Turkey and the Energy Equation in the Eastern Mediterranean